Valeura Energy Inc.: Fourth Quarter and Year-end 2023 Results
Record Results in 2023 from First Year of Thailand Operations
SINGAPORE and CALGARY, Alberta, March 26, 2024 (GLOBE NEWSWIRE) -- Valeura Energy Inc. (TSX:VLE, OTCQX:VLERF) ("Valeura" or the "Company"), the upstream oil and gas company with assets in the Gulf of Thailand and the Thrace Basin of Türkiye, reports its financial and operating results for the three month period and year ended December 31, 2023.
The complete reporting package for the Company, including the audited financial statements and associated management's discussion and analysis ("MD&A") and the 2023 annual information form ("AIF"), are being filed on SEDAR+ at www.sedarplus.ca and posted to the Company's website at www.valeuraenergy.com.
2023 Highlights
- Closed the Mubadala Acquisition(1) for cash consideration of US$10.4 million, adding three producing offshore Gulf of Thailand fields to the Valeura portfolio;
- Four producing fields yielded average oil production of 20,440 bbls/d(2);
- Restarted production from the Wassana field and drilled appraisal wells which confirmed the presence of oil deeper than previously proven, leading to a potential re-development of the field and extension of field life beyond 2030;
- Drilling activity extended the economic life of all fields in the Company's Thailand portfolio;
- Replaced more than double the volume of oil produced by all fields in 2023 - 219% through proved (1P) and proved plus probable (2P) reserves additions (reserves replacement ratio);
- Generated adjusted cash flow from operations of US$152 million(3);
- Fully paid off debt and had accumulated cash of US$151 million as of December 31, 2023;
- Further strengthened the balance sheet by reassessing and reducing decommissioning obligation on the balance sheet by 30% to US$129 million(4);
- Increased 2P net present value (NPV) before tax to US$616 million and US$429 million after tax(5); and
- Considering year end 2023 cash position, increased 2P net asset value (NAV) after tax to US$579 million, equating to C$7.56 per share(6).
(1) As more fully defined in the AIF, closed March 22, 2023.
(2) Working interest share production, before royalties, from closing of the Mubadala Acquisition on March 22, 2023 through December 31, 2023.
(3) Non-IFRS financial measure (defined below) or non-IFRS ratio - see "Non-IFRS Financial Measures and Ratios" section within this news release.
(4) Compared to decommissioning obligation of US$184 million as first reported following the Mubadala Acquisition as at March 31, 2023.
(5) Discounted at 10% discount rate (NPV10).
(6) 2P NPV10 plus net cash at December 31, 2023, assuming C$/US$ exchange rate of 0.742, and 103.3 million shares outstanding (as of February 19, 2024).
Sean Guest, President and CEO commented:
"I am very pleased to present our first full year financial results which reflect the true scale of our now-transformed business. Through the Gulf of Thailand acquisitions we completed in 2022 and 2023 and the hard work our team has performed throughout the year, Valeura has become a strongly cash flow generating business, with assets that are exceeding expectations on all fronts.
Importantly, we have also created a clean and resilient balance sheet. The cash flow capacity of our assets has allowed us to rapidly pay off all debt and exit the year with US$151 million in cash. We have also seen our decommissioning obligations drop to US$129 million, a 30% reduction from the total we reported just after closing the Mubadala Acquisition. Valeura's financial position is exceptional and positions us very well for further growth.
Drilling activity and studies performed in 2023 resulted in our independent third-party reserves evaluator significantly increasing reserves volumes and value. The life of all fields was extended on the back of a reserves replacement ratio of 219%. Additionally, appraisal of the Wassana field has proven more oil than previously reported which will underpin a 2024 decision on field expansion. This increase in 2P reserves value, when coupled with our cash, generates a net asset value of over C$7/share.
The complementary nature of our assets is becoming increasingly apparent as we completed the process to merge the companies into a single organisation. We reduced unit operating costs in 2023 and the team are enthusiastically seeking further synergies in cost optimisation and tax efficiency as we look to 2024.
We intend to continue to aggressively pursue value through our growth-oriented strategy, which continues to include aspirations to growth both organically and inorganically by way of mergers and acquisitions opportunities, which we continue to see in our core Southeast Asia region.
We continue to drive safety and sustainability as a priority throughout our operations and will publish our inaugural sustainability report in the near term to articulate key performance metrics for the business in 2023. Through the sustainability report we aspire to be transparent about our performance and to create a baseline from which to measure improvement over time, so as to best assure the ongoing sustainability of our business."
Financial and Operating Results Summary
| Three months ended |
Year ended | ||||
| December 31, | December 31, | ||||
| 2023 | 2023 | ||||
| Oil Production(1) | ('000 bbls) | 1,763 | 5,825 | ||
| Average Daily Oil Production(1) | bbls/d | 19,165 | 15,960 (365 days(3)) 20,440 (285 days(3)) |
||
| Average Realised Price | $/bbl | 85.5 | 84.3 | ||
| Oil Volumes Sold | mmbbls | 2.0 | 5.9 | ||
| Oil Revenue | $ 'mm | 169.9 | 493.5 | ||
| Adjusted Opex per bbl(2) | $/bbl | 29.4 | 28.3 | ||
| Adjusted Capex(2) | $ 'mm | 30.4 | 108.7 | ||
| Adjusted Pre-Tax Cash Flow from Operations(2) | $ 'mm | 88,3 | 238.7 | ||
| Adjusted Cash Flow from Operations(2) | $ 'mm | 56.0 | 152.4 | ||
| Adjusted EBITDAX(2) | $ 'mm | 96.7 | 230.7 | ||
| As at | |||
| December 31, | December 31, | ||
| 2023 | 2022 | ||
| Cash & Cash equivalents and Restricted cash | (US$'000) | 151,165 | 17,585 |
| Current and Non-Current Debt | (US$'000) | - | 11,090 |
| Adjusted Working Capital Surplus(2) | (US$'000) | 117,240 | 13,247 |
| Shareholder's Equity | (US$'000) | 287,682 |
28,457 |
(1) Working interest share production, before royalties.
(2) Non-IFRS financial measure - see "Non-IFRS Financial Measures and Ratios" section within this MD&A.
(3) Average Daily production of 15,960 bbls/d represents average over the full calendar year (365 days), whereas , the average daily production of 20,440 bbl/d represent the average production over the period from the closing of the Mubadala Acquistion on March 22nd, 2023 (i.e. 285 days).
Financial Update
The table above shows a comparison of key financial and operating metrics for both Q4 and the full year, to the same periods in 2022. However, as Valeura established active production operations following the close of the Mubadala Acquisition on March 22, 2023, the comparison to 2022 provides no insight regarding production, revenue, price realisations, and taxes. Accordingly, no discussion is offered for these metrics.
The Company's Q4 2023 financial performance reflects ongoing oil production which averaged 19,165 bbls/d leading to sales of 1.987 million bbls and generating oil revenue of US$169.9 million. Production during the quarter was primarily from the Company's Jasmine, Nong Yao, and Manora oil fields, with the Wassana field contributing only minor volumes due to being offline for much of Q4. The Company implemented operating changes at the third-party operated storage vessel to enhance safety, and production at the Wassana field was restarted on December 8, 2023. Production rates, as shown, are the Company's working interest share, before royalties.
For the full year of 2023 (which effectively covers the period of March 22, 2023 through December 31, 2023 during which Valeura operated the assets acquired via the Mubadala Acquisition), total oil sales were 5.854 million bbls, generating oil revenue of US$493.5 million. This equates into an average oil production rate of 20,440 bbls/d for the 285-day period from March 22, 2023, the date on which Valeura closed the Mubadala Acquisition.
Valeura's average realised price for crude oil sales was US$85.5/bbl in Q4 2023, reflecting an average premium to the Brent crude oil benchmark of approximately US$1.2/bbl. For the year ended December 31, 2023, Valeura's average realised price was US$84.3/bbl, which was a premium of US$2.2/bbl above the Brent crude oil benchmark. Realised prices during both Q4 and the full year 2023 were broadly in line with the Company's guidance expectation for realised prices throughout the year being approximately on par with the Brent crude oil benchmark.
In Q4 2023, operating expenses were US$49.6 million, and Adjusted Opex (a non-IFRS measure which is more fully described in the "Non-IFRS Financial Measures and Ratios" section of this news release) were US$51.8 million, or US$29.4/bbl on a unit basis. Q4 operating costs reflect a relatively higher volume of maintenance activity and well workovers than previous quarters and was consistent with the Company's plans and included in its 2023 guidance estimates. For the year ended December 31, 2023, Adjusted Opex averaged US$28.4/bbl on a unit basis.
During Q4 2023 and full year 2023, the Company generated Adjusted Cash Flow from Operations (a non-IFRS measure which is more fully described in the "Non-IFRS Financial Measures and Ratios" section of this news release) of US$58.2 million, and US$137.3 million, respectively. During Q4 2023, Valeura generated comprehensive income of US$57.4 million, compared to a comprehensive loss of US$7.9 million in Q4 of 2022. For the full year ended December 31, 2023, comprehensive income was US$246.0 million, compared to a comprehensive loss of US$15.2 million for the full year ended December 31, 2022.
Valeura incurred total tax expenses of US$71.2 million during the year ended December 31, 2023.
Valeura's current and non-current debt at December 31, 2023 was nil, compared to US$11.1 million at December 31, 2022. During the year 2023, the Company increased its debt through draws from a facility arrangement (more fully described in the AIF), then fully repaid the debt during Q4 2023.
As at December 31, 2023, Valeura had cash and cash equivalents of US$151.2 million (including restricted cash of US$17.3 million), compared to US$17.6 million as at December 31, 2022. The change in cash position reflects the combined effect of net cash inflows as a result of closing the Mubadala Acquisition just before the end of Q1 2023, and positive after-tax net cash flows from its ongoing oil production business throughout the remainder of 2023.
As the Company's current and non-current debt at December 31, 2023 was nil, the Company's December 31, 2023 net cash balance was comprised of only its cash and cash equivalents, of US$151.2 million.
Operations Update and Outlook
During Q4 2023, the Company had ongoing production operations on its Jasmine/Ban Yen, Nong Yao, and Manora oil fields. Production operations at the Wassana field remained suspended at the beginning of the quarter but resumed on December 8, 2023. Aggregate working interest oil production during Q4 2023 was 19,165 bbls/d. The Company had ongoing operations at its Wassana field throughout the year, comprised of a period of start-up preparation, active production operations, a temporary production suspension, and again active production operations toward the end of the year. The Company's Jasmine/Ban Yen, Nong Yao, and Manora fields were in active production throughout the year, from the completion of the Mubadala Acquisition onwards. The average oil production from all assets since closing of the Mubadala Acquisition on March 22, 2023 was 20,440 bbl/d (Valeura working interest share, before royalties). The average production for the first half of March was approximately 23,000 bbl/d.
One drilling rig was actively drilling across all of the assets for the full year.
Jasmine
Production from the Jasmine/Ban Yen oil field, in Licence B5/27 (100% Valeura working interest) averaged 8,864 bbls/d during Q4 2023, and 9,269 bbls/d from March 22, 2023 to year end. In May of 2023, the field achieved an historic milestone, having produced its 90 millionth barrel of oil. In March 2024 (period of March 1 to March 23, 2024), production from the Jasmine/Ban Yen fields averaged 7,914 bbls/d.
During 2023, the Company conducted two separate drilling campaigns on the Jasmine field, one on the Jasmine B platform which was in progress at the time of closing the Mubadala Acquisition and completed in May 2023, and one on the Jasmine D wellhead platform from September through October 2023. In aggregate, the Company drilled 11 (gross and net) wells on the Jasmine field, with six being production-oriented development infill wells and five appraisal wells. In addition, the Company conducted one well workover in 2023 on the Jasmine field.
During 2023, Valeura also completed a study into power generation and emissions efficiency opportunities at the Jasmine field, culminating in a project to install a gas turbine generator tailor-made to utilise the field's unique waste gas stream as feedstock for power generation. The project is intended to both reduce the field's greenhouse gas emissions and diesel consumption, and thus reduce operating costs.
2P Gross Reserves (working interest share, before royalties) at the Jasmine/Ban Yen fields increased from 10.0 million bbls at end 2022 to 10.4 million bbls at end 2023, after having produced 3.4 million bbls during the year. This constitutes reserves replacement of 112% and has resulted in a further extension to the estimated economic life of the fields to December 2028.
The Company believes that with continued infill drilling and ongoing well workovers on the Jasmine/Ban Yen fields, it can reduce the effect of natural declines and continue the fields' long history of year-on-year reserves additions. Valeura's work programme in 2024 calls for drilling approximately seven wells in the second half of the year, in addition to one exploration well to test the Ratree prospect.
Nong Yao
Oil production from the Nong Yao oil field, in Licence G11/48 (90% Valeura working interest) averaged 6,436 bbls/d during Q4 2023 and 7,134 bbls/d from March 22, 2023 to year end. In March 2024 (period of March 1 to March 23, 2024), production from the Nong Yao field averaged 7,214 bbls/d.
During the year the Company conducted two drilling campaigns on the Nong Yao field, one in Q2 on the Nong Yao B wellhead platform, and one in Q4 on Nong Yao A. In aggregate, the Company drilled a total of six gross wells (5.4 net). Five of the gross wells (4.5 net) were development-oriented production wells, in addition to one gross (0.9 net) appraisal well. In addition, the Company conducted one well workover in 2023 on the Nong Yao field.
The overall effect of Valeura's Nong Yao drilling and well work in 2023 has been an increase in production and reserves as well as an expansion in the perceived opportunity set for further infill drilling within the field. 2P Gross Reserves (working interest share, before royalties) at the Nong Yao field have increased from 11.2 million bbls at year end 2022 to 12.4 million bbls at year end 2023, after having produced 2.7 million bbls during the year. This constitutes 147% reserves replacement and has resulted in a further extension to the estimated economic life of the field.
Also during the year, the Company conducted groundwork for the expansion of the Nong Yao oil field through development of the new field known as Nong Yao C. In 2023, the mobile offshore production unit ("MOPU") T7 Shirley was refurbished and a three-kilometre pipeline was installed to connect the existing production infrastructure to the MOPU. As of the time of this release, the MOPU has been installed on site and preparation is underway for hook-up, commissioning and the commencement of drilling activity. Development drilling is expected to commence in the coming weeks with a programme comprised of up to nine gross wells (8.1 net), being six producers and up to three water injectors. First production from the Nong Yao C extension is expected in late Q2 2024, and when fully on stream in the months thereafter, the Company is targeting peak oil production rates from the greater Nong Yao field totalling approximately 11,000 bbl/d (90% Valeura working interest).
In addition to the development drilling, the Company intends to drill one exploration well (0.9 net) on the nearby Nong Yao D prospect.
Manora
Oil production at the Manora oil field, in Licence G1/48 (70% Valeura working interest) averaged 3,420 bbls/d during Q4 2023, and 3,336 bbls/d from March 22, 2023 to year end. In the first part of March 2024 (period March 1 to March 16, 2024), production from the Manora field averaged 2,946 bbls/d, after which production was suspended for a planned maintenance shutdown. At the time of this release, the planned maintenance is complete and the facility has returned to full production.
In Q2 2023, the Company conducted a successful infill drilling programme of three development wells (2.1 net) to commercialise bypassed oil downdip of existing wells in one of the field's deeper intervals, as well as multiple attic or bypassed accumulations in shallower reservoirs. The Company also conducted one well workover during the year.
The effect of infill drilling has been an increase in production output from the Manora field, and an increase of reserves. 2P Gross Reserves (working interest share, before royalties) increased from 1.8 million bbls at year end 2022 to 2.2 million bbls at year end 2023, after having produced 1.2 million bbls during the year. This constitutes 132% reserves replacement and has resulted in a further extension to the estimated economic life of the field to July 2027. Importantly, the results of the Manora 2023 work programme indicate the potential for further development opportunities on the field. Additionally infill drilling is notionally planned for late 2024.
Wassana
Production of oil at the Wassana field, in Licence G10/48 (100% Valeura working interest) started in April 2023 and was voluntarily suspended in July as part of the Company's drive to enhance safety on the field's third-party operated FSO. Production then recommenced on December 8, 2023. Given the short period of 24 days' production in Q4, the Company recorded an average of 445 bbls/d during the quarter, and 548 bbls/d during the full year 2023 from 93 days of total production. Daily production rates did achieve levels of over 3,000 bbls/d after both restart periods in 2023 illustrating the early potential of the asset as part of Valeura's portfolio.
In December 2023 Valeura began an infill drilling campaign on the Wassana field, initially planned to include three production-oriented horizontal wells, and subsequently expanded to a programme of five new wells and two well workovers. The last two new wells and the workovers were brought on production in the past two weeks. In March 2024 (period of March 1 to March 23, 2024), production from the Wassana field averaged 4,930 bbls/d.
In addition to the year-end development drilling campaign, which continued into 2024, Valeura drilled two appraisal wells (gross and net) on the Wassana field in Q3 2023 and conducted three well workovers, targeting deeper portions of the reservoir. The wells were successful in proving the presence of oil deeper than previously demonstrated and as a result, the Company has commenced a review of development options to expand the field's production infrastructure, which could increase production and extend the field life beyond 2030. Valeura has commissioned a project team to select a suitable development concept for re-development of the field and anticipates making a final investment decision in 2024.
As a result of the 2023 appraisal drilling and studies, 2P Gross Reserves (before royalties) at the Wassana field have increased from 6.1 million bbls at year end 2022 to 12.9 million bbls at year end 2023 and the economic field life has been extended to June 2032. The Company sees potential for further reserves upside, with volumes largely dependent on the final development concept selected in 2024 for the potential redevelopment of the field.
Reserves and Resources Summary
The results of Valeura's third-party independent reserves and resources assessment for its Thailand assets as of December 31, 2023 were announced on February 20, 2024. Highlights were as follows:
- Reserves increased across all fields - 29.9 MMbbl 1P, 37.9 MMbbl 2P and 46.5 MMbbl proved plus probable plus possible (3P);
- 1P and 2P Reserves Replacement more than double the volume of oil produced in 2023 - 219%;
- 2P net present value before tax of US$616 million and US$429 million after tax(1);
- Considering year end 2023 cash position of US$151 million, 2P net asset value after tax of US$579 million, equating to C$7.56 per share(2); and
- More than three-fold increase in best estimate (2C) contingent resources, on a risked basis.
(1) Discounted at 10% discount rate (NPV10).
(2) 2P NPV10 plus net cash at December 31, 2023, assuming C$/US$ exchange rate of 0.742, and 103.3 million shares outstanding.
Summary of Reserves Replacement, Value and Field Life
| 2P Reserves (Gross WI) | End of Field Life |
2P NPV10 After Tax (US$ million) |
|||||||||
| Fields | December 31, 2022 (MMbbls) |
2023 Production (MMbbls) |
Additions (MMbbls) |
December 31, 2023 (MMbbls) |
Reserves Replacement Ratio (%) |
NSAI 2022 Report |
NSAI 2023 Report |
December 31, 2022 |
December 31, 2023 |
||
| Jasmine | 10.0 | (3.4) | 3.8 | 10.4 | 112% | 26-Jun | 28-Dec | 37.1 | 81.8 | ||
| Manora | 1.8 | (1.2) | 1.6 | 2.2 | 132% | 26-Jan | 27-Jul | 12.1 | 21.2 | ||
| Nong Yao | 11.2 | (2.7) | 3.9 | 12.4 | 147% | 27-Jul | 28-Dec | 145.5 | 185.6 | ||
| Wassana(1) | 6.1 | (0.2) | 7 | 12.9 | 3,500% | 27-Sep | 32-Jun | 66.3 | 139.9 | ||
| Total | 29.1 | (7.5) | 16.3 | 37.9 | 219% | 261.0 | 428.6 | ||||
(1) Valeura's working interest in the Wassana field was 89% at December 31, 2022 and 100% at December 31, 2023.
Summary of NPV and NAV
| 1P Before Tax |
2P Before Tax |
1P After Tax |
2P After Tax |
|
| NPV10 (US$ million) | 301 | 616 | 194 | 429 |
| Net debt at December 31, 2023 (US$ million)(1) | 151 | 151 | 151 | 151 |
| Net Asset Value (US$ million) | 453 | 768 | 345 | 580 |
| Net Asset Value (C$ million)(2) | 610 | 1,034 | 465 | 781 |
| Common shares (million)(3) | 103.3 | 103.3 | 103.3 | 103.3 |
| Estimated NAV per basic share (C$ per share) | 5.90 | 10.01 | 4.50 | 7.56 |
(1) Cash at December 31, 2023 of US$151 million, debt nil.
(2) C$/US$ exchange rate of 0.742.
(3) Issued and outstanding as of February 20, 2024.
Webcast
Valeura's management team will host an investor and analyst webcast at 09:00 Calgary /15:00 London / 22:00 Bangkok / 23:00 Singapore today, Tuesday, March 26, 2024 to discuss this announcement. The live audio and video feed can be accessed via the link below. Written questions may be submitted through the webcast system or by email to IR@valeuraenergy.com.
An audio only feed of the event is available by phone using the Conference ID and dial-in numbers below.
Conference ID: 770 213 036#
Dial-in numbers:
Canada:833-845-9589
Singapore:+6564506302
Thailand:+6620269035
Türkiye:00800142034779
UK:08006403933
USA: 833-846-5630
For further information, please contact:
| Valeura Energy Inc. (General Corporate Enquiries) | +65 6373 6940 |
| Sean Guest, President and CEO | |
| Yacine Ben-Meriem, CFO | |
| Contact@valeuraenergy.com | |
| Valeura Energy Inc. (Investor Enquiries) | +1 403 975 6752 / +44 7392 940495 |
| Robin James Martin, Vice President, Communications and Investor Relations | |
| IR@valeuraenergy.com | |
| CAMARCO (Public Relations, Media Adviser to Valeura) | +44 (0) 20 3757 4980 |
| Owen Roberts, Billy Clegg | |
| Valeura@camarco.co.uk |
Contact details for the Company's advisors, covering research analysts, and joint brokers, including Auctus Advisors LLP, Cormark Securities Inc., Research Capital Corporation, Schachter Energy Report, and Stifel Nicolaus Europe Limited, are listed on the Company's website at www.valeuraenergy.com/investor-information/analysts/.
About the Company
Valeura Energy Inc. is a Canadian public company engaged in the exploration, development and production of petroleum and natural gas in Thailand and in Türkiye. The Company is pursuing a growth-oriented strategy and intends to re-invest into its producing asset portfolio and to deploy resources toward further organic and inorganic growth in Southeast Asia. Valeura aspires toward value accretive growth for stakeholders while adhering to high standards of environmental, social and governance responsibility.
Additional information relating to Valeura is also available on SEDAR+ at www.sedarplus.ca.
For full release, please visit: https://www.globenewswire.com/news-release/2024/03/26/2852187/0/en/Valeura-Energy-Inc-Fourth-Quarter-and-Year-end-2023-Results.html